Reform – Not More Revenue – Is Needed By The United Nations
By Stephen M. Lilienthal (07/06/06)
The United Nations Building in Manhattan once symbolized to Americans hope for world peace; increasingly it is coming to symbolize inefficiency and lack of transparency. The lack of accountability became clear at a recent hearing conducted by Senator Thomas Coburn, M.D. (R-OK), Chairman of the Federal Financial Management Subcommittee. Coburn’s commitment to thorough oversight over how Federal tax dollars are spent led him to follow up a similar hearing held last year. The most recent hearing was warranted due to the burgeoning cost of the UN renovation plan.
Coburn convened the hearing by reciting the skyrocketing cost. “Since [the 2005] hearing, the price of the proposal, referred to as the Capital Master Plan, has grown 45% and is now priced at $1.7 billion.” The Ronald Reagan Center, opened in 1998 in Washington, cost $263 per square foot to construct; the UN plan calls for spending $697 per square foot to renovate that which Coburn insists should be “a cheaper renovation.” The United States’ share – assuming the costs of the Capital Master Plan would remain constant, which Coburn terms a “big ‘if’” – would total $485 million. “That’s on top of regular dues of $423 million annually plus all the special contributions, on the order of $2.4 billion,” noted Coburn.
The major contributors to the UN do not call the shots. Coburn explained:
“Ironically, on the same day in April when the U.N. budget committee authorized more spending on the renovation project, the committee also voted down Secretary General Kofi Annan’s modest management reform package. I note that the countries who voted down these reforms contribute 12% of the UN budget. The 50 nations that voted for the reforms contribute 87%. Those of us paying most of the bills were outvoted by those who contribute much less to UN operations. And yet some of these developing countries are the very same ones dependent on UN programs, and who in theory should most want efficient, transparent, effective and honest United Nations operations.”
Coburn has criticized the UN for failing to support needed reforms that would achieve transparency and accountability despite admissions by the UN’s own auditors that fraud and waste in UN contracting is substantial. The same accountability Coburn is urging the United States Government to adopt – posting all grants and contracts for public inspection via the World Wide Web – is one he recommends the United Nations implement. Until then, Coburn urges the United States Congress withhold funds for the Capital Master Plan and UN budget.
There is a need to renovate the United Nations headquarters, with which our Ambassador to the UN, John R. Bolton, agrees. Most of the organization’s buildings in New York City were erected fifty years ago and need to be renovated to become more energy-efficient and secure against fire and attack. Unfortunately, too many of the smaller UN nations are absolutely opposed to providing more accountability and oversight as to how the UN handles its funds. Bolton told the Federal Financial Management Subcommittee that as the United States continues to seek support among UN members for reforms that can instill more accountability the “majority of member states” had written “a letter to the Secretary-General chastising him for issuing reports to the public on his proposals for some reforms he feels are necessary.” The United States does not support every measure advocated by Annan but our country’s representation to the UN backs his “diagnosis” of the problems. The Government Accountability Office earlier this year had issued a report by David M. Walker, Comptroller General of the United States, “United Nations: Internal Oversight Controls And Processes Need Strengthening,” examining the UN failure to vest its Office of Internal Oversight Services (OIOS) with effective power to provide that oversight. GAO recently issued another report, “United Nations: Weaknesses In Internal Oversight And Procurement Could Affect The Effective Implementation Of The Planned Renovation,” by Thomas Melito, GAO Director of International Affairs and Trade, that examined the Capital Master Plan.
The report is another indictment of UN failure to update its policies and procedures to prevent waste, fraud and abuse. Melito agrees that renovations to the UN Building are required. However, he, like Walker, argues that the OIOS is too weak to exert the thorough oversight required of the Capital Master Plan because it essentially needs permission – including coverage of costs -- from the very UN agencies it seeks to audit. “OIOS is dependent on UN funds and programs and other UN entities for resources, access, and reimbursement for the services it provides. These relationships present a conflict of interest because OIOS has oversight over these entities, yet it must obtain their permission to examine their operations and receive payment for its services,” writes Melito. Program managers, Melito adds, “have the right to deny funding for oversight work proposed by OIOS.”
Melito asserts that the United Nations lacks an “independent bid protest process,” which would permit a vendor to protest an awarded contract. Such a process could enable unsuccessful bidders to “help alert” UN management to departures from stated procedures in determining the recipient of a contract. This finding takes on added importance when combined with the finding that “the UN may be vulnerable to favoring certain vendors or dealing with unqualified vendors….In 2003, an OIOS report found that the Procurement Service’s roster contained questionable vendors.” The roster of qualified vendors had not been made “fully reliable” as of last year, according to OIOS.
GAO discovered that UN procurement had been on the upswing during the last few years yet the staff of the Headquarters Committee on Contracts had remained constant. The Committee is charged with reviewing contracts over $200,000. The overload led UN auditors to assert that the Review Committee’s lack of resources means it “cannot properly review contract proposals. It may thus recommend contracts for approval that are inappropriate and have not met UN regulations.” Another shortcoming identified by GAO was the failure thoroughly to train its procurement staff. “Recent studies indicate that Procurement Service staff lack knowledge of UN procurement policies….The UN has not established requirements for procurement staff to obtain continuous training, resulting in inconsistent levels of training across the procurement workforce.”
The report concludes by noting there are “numerous weaknesses” in the procurement process that leave the [Capital Master Plan] “highly vulnerable to waste, fraud, and abuse.” An open question is whether the UN will have the “sustained leadership” to achieve a procurement process with true accountability and effective oversight.
Ambassador Bolton recently called upon the United Nations to recommend all appointees resign their posts once a new Secretary-General is selected later this year. “I strongly recommend that all appointees, [Assistant Secretaries-General] and above, should resign their posts to give the new Secretary-General a lot of flexibility,” Bolton said in June 7, 2006 NEW YORK SUN article. [UN rules do not require Assistant Secretaries-General to offer their resignation but Under Secretaries-General are expected to do so.]
What is disturbing about the failure to instill adequate procurement controls at the United Nations is its insatiable appetite for more revenue. A webpage credited to the UN Financing for Development Coordinating Secretariat includes this passage from the “High-Level Panel on Financing for Development – Recommendations & Technical Report” dated June 26, 2001:
“The international community must recognize that it is in the common interest to provide stable and contractual resources [to combat poverty and pollution and security]. Politically, taxing for the solution of global problems will be much more difficult than taxing for purely domestic purposes. But like all political decisions that are taken for the next generation and not just the next election, this one should be assessed carefully against the alternative scenarios, including the very dangerous one of continuing polarization, exclusion, confrontation and insecurity in the world. If only out of self-interest, new sources of finance must be considered without prejudice by all parties involved.”
This report urges that if global taxation is rated as “desirable” serious consideration be extended to measures such as a tax on currency transactions or carbon emissions. This talk continues within the UN and some countries. Brazil, Chile, France, Germany and Spain issued a call for a “nationally applied, internationally coordinated” tax on airline travel late last year. Senator James M. Inhofe (R-OK) intends to build a bipartisan coalition in the Senate to declare through legislation that the United States will not participate in any UN taxation scheme.
Americans need to make it clear that the United Nations needs meaningful reform – not more revenue. Senator Coburn is right to insist the UN not receive funds from the United States for building renovations and dues until it provides more transparency about how it is spending its funds and more oversight to assure contributions made by its member states are spent wisely.
Good intentions are not enough when they lead to waste of untold sums of money. If the United Nations intends to remain a vital institution in this century there is no alternative but to put its fiscal house in order.
Stephen M. Lilienthal is a policy analyst at the Free Congress Foundation.
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